Xbox Announces Massive Layoffs, Sheds Four Game Studios in Major Restructure

Xbox has initiated what its CEO Asha Sharma described as "the most significant restructure in Xbox history," announcing the layoff of approximately 3,200 employees. The cuts will be implemented in two phases, with 1,600 individuals losing their jobs immediately and an additional 1,600 slated for dismissal over the company's fiscal year. This major workforce reduction also impacts four game development studios: Compulsion Games, Double Fine, Ninja Theory, and Undead Labs, which will "leave Xbox to new management."

While none of these four studios will be closing outright, Compulsion and Double Fine are set to regain their independence, retaining their intellectual property, catalog, and development resources for future projects. Ninja Theory and Undead Labs are being sold to undisclosed new owners.

The situation appears more uncertain for Arkane, where management has begun a mandatory consultation process with its Works Council to explore strategic options. Details regarding this process, particularly concerning the ongoing development of the Blade game, remain undisclosed. In France and other EU nations, such consultations are a legal requirement during layoff procedures.

Reductions are also being made across other Xbox divisions, including Activision, Bethesda/ZeniMax, Blizzard, King, Mojang, and Xbox Game Studios. Despite these widespread cuts, no ongoing projects are reported to be cancelled. Mojang, the studio behind Minecraft, and mobile game developer King will now report directly to CEO Asha Sharma.

Sharma characterized the current business state as "not healthy," a stark contrast to the optimistic outlook shared by her predecessor, Phil Spencer, approximately one year prior. Spencer had then described the platform, hardware, and game roadmap as "stronger than ever" while implementing his own round of layoffs. Sharma also expressed a shift away from Spencer's strong emphasis on Game Pass and multi-platform releases, noting that while these initiatives "created meaningful value, they did not grow at the pace we expected."